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The controller of Crane Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month Total Maintenance Costs Total Machine Hours January $2,590 330 February 2,890 380 March 3,490 530 April 4,390 660 May 3,090 530 June 4,790 730
(a1) Determine the variable cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.) Variable cost per machine hour $enter the variable cost components using the high-low method rounded to 2 decimal places eTextbook and Media
(a2) Determine the fixed cost components using the high-low method. Total fixed costs $enter the fixed cost components using the high-low method

Respuesta :

anthougo

Answer:

Crane Industries

a1) The variable cost per unit = $5.50

a2) The fixed costs per month = $775

Explanation:

a) Data and Calculations:

Month   Total Maintenance Costs   Total Machine Hours

January                $2,590                                 330

February                2,890                                 380

March                     3,490                                 530

April                       4,390                                  660

May                       3,090                                  530

June                      4,790                                  730

Using the High-Low Method:

Month   Total Maintenance Costs   Total Machine Hours

High:

June                      $4,790                                 730

Low:

January                $2,590                                 330

Difference           $2,200                                 400

Variable cost per unit = $5.50 ($2,200/400)

Fixed costs:

June  total costs = $4,790

June total units = 730

Total variable costs = $4,015 ($5.50 * 730)

Fixed costs = Total costs - total variable costs

= $775

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